How Wrestlemania Body Slammed New Jersey

$3 million in tax credits for a one-off event in a stadium in a swamp.

New Jersey officials have been doing a ton of work getting to the bottom of their state’s corporate tax incentive programs. State audits, alongside some very good journalism, have shown those programs to be wracked by mismanagement and corruption. Powerful lawmakers used them to line their pockets, while companies employed a whole host of underhanded methods to wring more dollars out of Garden State taxpayers.

As all of that has been happening, however, the state’s Economic Development Authority, which doles out said tax breaks, keeps on chugging along, approving new giveaways. Which brings us to Wrestlemania:

New Jersey has greenlighted roughly $13 million in film tax credits for "WrestleMania" and David Simon's production of the Philip Roth novel "The Plot Against America."

The Economic Development Authority authorized the tax credits at its board meeting Tuesday. It's the third round of film tax credits under a 2018 law that established awards. […]

"WrestleMania XXXV" got a $2.9 million award and was shot in April at MetLife Stadium in East Rutherford.

"The Plot Against America," starring Winona Ryder and John Turturro, got a $10.2 million award and was shot in Jersey City.

That’s nearly $3 million in tax credits for a one-night event that, not for nothing, ended with tens of thousands of people stranded as they waited for public transit.

Subsidizing a one-off entertainment event is one of the worst possible uses of taxpayer dollars. It creates no permanent jobs, no sustained economic growth, and doesn’t build a foundation under any industry.

Also, since this event was at Metlife Stadium, which is in the middle of empty fields and parking lots out in some wetlands, there’s not even the chance that surrounding businesses benefit from any trickle-down effect. Much like when Minnesota subsidized a single Super Bowl special for Jimmy Fallon’s “Tonight Show,” giving tax credits to Wrestlemania is just a big waste.

New Jersey’s tax credit for movie/TV production actually expired in 2015 under former Republican Gov. Chris Christie, who vetoed several attempts to bring it back to life. But Democratic Gov. Phil Murphy, who is otherwise on the right side of corporate tax abuse issues, is for some reason enamored with subsidizing movies, TV shows, and other entertainment. He allowed the program to be revived in 2018, to the tune of $425 million over five years.

He did so despite all of the available evidence that tax breaks for film production are not cost effective, create few long-term jobs, and actually cause state economies to be smaller than they would be otherwise due to the opportunity cost of forgoing more worthwhile investments. A recent study by Michael Thom at the University of Southern California added to the scholarship showing that when it comes to job creation, film/TV tax credits are mostly worthless.

Not only that, but Murphy recently said he wants to expand New Jersey’s program. “The film and TV [tax credit] is a huge hit, and by the way the payback is immediate,” Murphy said. “This is not like the other incentives where you promise to do X but it’s over ten years. This is: the circus comes to town, and you hit immediately, and you get an immediate payback.”

He’s right about how it works, but wrong that the wham-bam effect is a good thing. Indeed, what happens when TV and movies are subsidized is production companies roll in, create some short-term jobs, put taxpayer dollars toward the salaries of out-of-state actors and producers, and then roll out again, leaving little to nothing worthwhile behind. One study of Michigan’s film subsidy showed that it took 2,763 short-term film jobs to create the equivalent of 250 full-time positions. That’s not real economic growth, it’s a rent-a-job program.

“Film tax credits simply do not generate enough economic activity or tax revenue to offset their cost. In the last 10 years alone, 13 states have eliminated their film incentive programs, while other states are scaling them back,” explained Brandon McKoy, president of New Jersey Policy Pespective, in an email. “The administration's embrace of film subsidies is alarming given its supposed interest in tax incentive reform and the wealth of research showing film tax credits are a poor use of state resources. New Jersey would be better off investing in assets proven to drive economic growth, like job training, public education, and transportation.”

At the very least, New Jersey lawmakers could follow Minnesota’s lead and make one-off, national events ineligible for subsidies. Currently, any production that spends enough money in the state gets tax credits, very few questions asked.

New Jersey has been doing a whole lot right when it comes to uncovering wrongdoing in its economic development programs. It’d be good to extend that to one of the most wasteful programs of all, instead of allowing a one-night Wreslemania spectacle to wallop taxpayers right in the wallet.

Thanks for reading this edition of Boondoggle. If you don’t subscribe already, just click the green button below. If you liked this post, take a moment and click the little heart under the headline. It helps.

If you do subscribe, please send this around to friends, family, neighbors, or whoever you think might like it, and tell them to sign up too. Finally, if you’d like to pick up a copy of my book, The Billionaire Boondoggle, go here.